US stock futures edge lower after S&P 500 hits record high; PCE data in focus
On Tuesday, Keros Therapeutics (NASDAQ:KROS) faced a downgrade in stock rating from Buy to Neutral by Cantor Fitzgerald. The stock, which has declined nearly 80% over the past year according to InvestingPro data, currently trades at 0.83 times book value, suggesting potential undervaluation despite recent challenges.
The decision came after the company voluntarily paused dosing in its Phase 2 pulmonary arterial hypertension (PAH) trial for Cibotercept at all dosage levels, including the lower dose of 1.5 mg/kg, due to concerns of pericardial effusion, which is an accumulation of fluid around the heart. The news has contributed to the stock's recent volatility, with InvestingPro data showing a 13% decline in just the past week.
Previously in December, dosing at higher doses was halted for the same safety issue, but the lower dose continued after a benefit-risk assessment. Cantor Fitzgerald highlighted a recent Key Opinion Leader (KOL) call discussing this issue. Despite the setback, Keros Therapeutics is expected to present topline data from the Phase 2 PAH trial in the second quarter, following the completion of trial visits.
The future of Cibotercept in treating PAH is uncertain, given the safety events. The small sample size of the Phase 2 trial may make it challenging to determine if the safety events were confined to a specific subgroup of patients. Keros Therapeutics' management team remains blinded to the trial data.
In addition to the issues with Cibotercept, KER-065, originally targeted for obesity, has been reprioritized for development in neuromuscular diseases such as Duchenne muscular dystrophy (DMD). This strategic shift was not influenced by any efficacy or safety data from the ongoing Phase 1 trial in healthy volunteers.
Following the discontinuation of the PAH trial, Keros Therapeutics is tasked with expanding its pipeline, potentially through external opportunities, supported by a robust balance sheet with over $700 million in cash, including funds from an upfront payment by Takeda for elritercept.
InvestingPro analysis confirms the company's strong liquidity position, with a current ratio of 19.03 and liquid assets exceeding short-term obligations. For deeper insights into Keros's financial health and 15 additional ProTips, consider exploring InvestingPro's comprehensive analysis tools.
In other recent news, Keros Therapeutics has experienced significant changes due to recent developments in its clinical trials. The company announced the early termination of its Phase 2 TROPOS study for the treatment of pulmonary arterial hypertension with its drug cibotercept due to additional instances of pericardial effusion adverse events.
Piper Sandler, Oppenheimer, and Scotiabank (TSX:BNS) have revised their price targets for Keros Therapeutics, while maintaining positive ratings, following these developments.
Despite the termination of the TROPOS trial, Keros Therapeutics plans to release comprehensive results from the trial in the second quarter of 2025. Piper Sandler and Oppenheimer highlighted Keros Therapeutics' strong financial position, noting the company's significant cash reserves.
Analysts at Scotiabank and Truist Securities have expressed optimism about the company's prospects, citing potential for upside with Keros's Takeda-partnered lead asset, elritercept (KER-050), and the potential value in KER-065, a product candidate in Keros's pipeline with possible applications in rare diseases and obesity. These are the recent developments in Keros Therapeutics.
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